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New trade & adjustment – AGNC, PSEC & VNR long stock – building my ROTH

Today I maxed out my contributions to my ROTH IRA account! I am quite excited about it.

Now, I will continue contributing to my regular taxable account until the end of the year. When the new year 2014 starts I will resume contributing to my ROTH IRA as long as I max it out again. That’s the plan.

Will I be able to max my contributions and save $5500 in ROTH? I do not know yet as my priority is to pay off the debt first and then resume rebuilding my emergency account and continue building my retirement accounts.

At the same time as the new money arrived to my ROTH IRA account I bought more shares of my existing positions and some new positions.

I wanted higher yielding stocks to boost my income which can be reinvested. Here are the stocks I decided to buy:

American Capital Agency Corp. (AGNC)
Prospect Capital Corporation (PSEC)
Vanguard Natural Resources, LLC (VNR)

Trade adjustment – American Capital Agency Corp. (AGNC) – stock addition

I have been in this stock for some time. I have been buying since last year and because I was buying when the stock was high, my current yield on cost is 11.46%. I am satisfied with it.

AGNC is a mREIT stock. It means it is a mortgage backed security (MBS) which is out of favor and investors are heavily selling. Many of them are short-sighted looking for results in the next quarter, some maybe in the next year.

I am buying for next 20 years and I consider this mess around mREITs as a buy opportunity. Apparently I am not alone. The managers of the company are at the same boat as they were recently buying the stock of their company.

 
(MORE: Insiders Now Seeing Red With AGNC At New 52-Week Low)
 

As the stock was falling to new 52yr lows, company’s officers were buying. Gary D. Kain, Peter J. Federico, Christopher Kuehl, & Larry K. Harvey were the highest officers who were purchasing stocks at average price $21.66 a share. They were buying since July 2013.

One reason why investors were slashing AGNC because of a fear that FED will taper, which will increase interest rates and that would hurt the company. I believe this is a misunderstanding of how a company makes money. Higher interest rates will not hurt the company as long as the spread between short term loans and long term loans is wide enough for the company to make money on it. And the spread is wide enough.

If you watched my previous posts with Peter Schiff’s videos I am not convinced FED will taper at all. So who knows what the outcome will be at the end of this mess.

 
(MORE: American Capital Agency Corp – When The Dividend Yield is Bigger Than My Understanding of the Company)
 

The second reason is a book value of the company. Due to leveraging the company uses and changes in interest rates the book value was severely hit. But as usually, investors over-reacted and sent the stock even lower. Now it trades at 80% of its book value. I see a nice 20% growth potential in this stock. And on top of that I will be receiving 15.82% dividend on this purchase.

11/25/2013 09:30:03 Bought 49 AGNC @ 20.23

Note, I was buying cheaper than the insiders. This trade is speculative and doesn’t fit to a dividend growth strategy. I understand risks in this stock and this industry and although the stock suffered a few dividend cuts recently I think in a long term this is a good opportunity.

My annual dividend income from AGNC increased to $451.20 by this purchase.

 

Total shares held as of today: 141
Estimated annual dividend: $451.20
Consecutive Dividend Increase: 0 years
Dividend yield today: 15.72%
Dividend 5yr Growth: 0%
Dividend paid since: 2008

 

Trade adjustment – Prospect Capital Corporation (PSEC) – stock addition

Another stock addition to my portfolio. I have been investing into this stock for some time as well and enjoyed nice monthly dividend income. I use the income reinvesting into more shares of dividend growth stocks.

My average yield on cost is 12.07% although to current yield is 11.62%. the stock pays monthly dividend. The dividend growth is miniscule but there is one!

 
(MORE: A Brief Primer on Business Development Companies (BDC) Part 1: What are BDCs and why should you invest in them?)
 

Here is the trade detail:

11/25/2013 09:36:34 Bought 86 PSEC @ 11.45

The stock declared dividends far enough in 2014 already which can give this stock some boost in price or at least eliminate some volatility. This purchase increased my annual dividend income to $126.35

 

Total shares held as of today: 95
Estimated annual dividend: $126.35
Consecutive Dividend Increase: 1 year
Dividend yield today: 11.40%
Dividend 5yr Growth: NA
Dividend paid since: 2004

 

New trade – Vanguard Natural Resources, LLC (VNR) – initial stock purchase

Vanguard Natural Resources, LLC (VNR) is an energy stock. VNR is focused on the acquisition and development of oil and natural gas properties in the United States. Through the Company’s operating subsidiaries, it owns properties and oil and natural gas reserves located in nine operating areas: the Arkoma Basin in Arkansas and Oklahoma; the Permian Basin in West Texas and New Mexico; the Big Horn Basin in Wyoming and Montana; the Piceance Basin in Colorado; South Texas; the Williston Basin in North Dakota and Montana; the Wind River Basin in Wyoming; the Powder River Basin in Wyoming; and Mississippi.

 
(MORE: 3 Ideas If You’re Half a Million Short on Retirement)
 

On December 22, 2011, the Company acquired additional working interest in the certain oil and natural gas properties located in Mississippi. On June 29, 2012, the Company acquired natural gas and liquids assets from Antero Resources. On December 31, 2012, it consummated the previously announced acquisition of natural gas and liquids assets from Bill Barrett Corporation.

 
(MORE: Vanguard Natural Resources: A Solid Choice For Monthly Income)
 

The stock pays nice monthly dividend. Its yield as of this purchase is 8.63%. Its dividend growth rate is 7.99%.

11/25/2013 09:38:17 Bought 34 VNR @ 28.84

By this purchase I will be receiving $84.66 annual dividend.

 

Total shares held as of today: 34
Estimated annual dividend: $84.66
Consecutive Dividend Increase: 4 years
Dividend yield today: 8.63%
Dividend 5yr Growth: 7.99%
Dividend paid since: 2008

 

My total dividend income

I will be purchasing more stocks this week. Next purchase I will be making will be new initial trade buying Kinder Morgan Partnership (KMP) into my ROTH account. I currently have positions of KMP in my taxable account. Now I will be opening a new KMP position in my ROTH as well.

As of today, my total annual dividend income from ROTH is $1,035.41
 





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